Funds siphoned from Dena Bank, OBC; govt orders audit

Dena Bank’ scrip tumbled 5.06 per cent to Rs 60.10, while shares of Oriental Bank of Commerce fell by 3.63 per cent to Rs 264 on the BSE.

By: ENS Economic Bureau | Mumbai | Updated: August 21, 2014 12:56:14 am

The government has initiated forensic audit at state-run Oriental Bank of Commerce (OBC) and Dena Bank after unearthing of a suspected scam, wherein bank officials at their Mumbai branches misappropriated funds worth Rs 436 crore from fixed deposit customers.

The Central Bureau of Investigation (CBI) is investigating diversion of Rs 256 crore from Dena Bank’s Malabar Hill branch in Mumbai and Rs 180 crore from the Malwani branch of OBC.

Financial services secretary GS Sandhu said a “forensic audit has already been ordered”. Stating that it is a case of aberration at the individual officer level, Sandhu said, “These are instances which have happened at the lower level, at the branch level because of lack of due diligence or non-adherence to the norms and procedures.”

The frauds at two PSU banks had surfaced at a time when the dust raised after the arrest of chairman of Syndicate Bank, SK Jain, for alleged bribery charges is yet to settle down. RBI Deputy Governor SS Mundra said, “There are instances of individual failures but there is a certain process for it. We would certainly look into it. I think the regulations which are available are robust. Why such things happened is because regulations were not followed.”

Dena Bank said in a statement that it has suspended the erring branch manager and transferred the staff of the concerned branch. The bank has made a provision of Rs 54.29 cr during the quarter ended June 2014 and the balance is to be provided equally in subsequent three quarters of FY15.

OBC said it had reported the case in its Annual Report for FY14 and the June 2014 financial results. “JNPT has filed a case with the CBI and the matter is under investigation,” OBC said.

Jawaharlal Nehru Port Trust (JNPT) had placed funds aggregating Rs 180 crore with the bank’s Malwani branch for term deposit in two tranches in February. This was followed by letter purportedly signed by a JNPT official for transferring the said funds in the current account of Padmavati International.

Dena Bank’ scrip tumbled 5.06 per cent to Rs 60.10, while shares of Oriental Bank of Commerce fell by 3.63 per cent to Rs 264 on the BSE.

Govt plans legal provision for changing company managements 

MUMBAI: The government is getting ready to act against loan defaulters, especially willful defaulters, by making an amendment in the Sarfaesi Act that will enable lenders to force out promoters from the company managements.

“The government will move the amendment in the Act in the Winter Session of Parliament. Even after wilful defaults, promoters are sticking to their units. They can’t run it… if they don’t have the capacity, there should be a legal provision to force them to move out,” financial services secretary GS Sandhu said at an Indian Banks’ Association conference. On non-performing loans, Sandhu said, “It is a cause of worry. We’re trying to address this issue. The risk management needs to be strengthened.” ENS

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